Why is it (device pricing question)

Why is it that I can buy a GSM Galaxy Nexus that is unlocked directly from the Google Play Store - with no contact or hidden caveats - for $399? Yet, if I were to purchase one from Verizon off contract, it would cost me $649? $250 more? Why does Google even allow Verizon to price gouge like that? I was always under the impression that unlocked GSM devices cost more.